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A significant drop on DAX

We had pointed out that DAX reached first targets and there is a major possibility of a pullback and a re-test. We see a distinct bearish gap, after the first attempt of closing it price has dropped lower with a massive bearish momentum. We expect a re-test of the nearest support area which is the upper bound of the previous consolidation around 11700. There are no bullish signals right now, but if they appear within the nearest support are, we could see a leg higher and another attempt of reaching 12000.

link do file download linkAfter reaching first target of a bullish side, we see a distinct drop and a leg lower towards the nearest support area, source: xStation5

We had a softer session in Asian, European stocks opened lower as well. It seems that investors are taking a defensive stance in the wake of Trump’s controversial immigration policy. President Donald Trump issued an order (on 29th January) barring entry to them for 90 days. The travel ban concerns people from Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen. The decision has caused a significant backlash in the country. 

As a reminder the first days of Donald Trump’s presidency were highlighted by the Dow Jones index crossing above the psychological barrier of 20,000 points for the first time in history. We got solid results from Wall Street companies. However Wall Street ended a record breaking streak on Friday, the losses may be extended today amid Trump’s controversial actions.  

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Deutsche Bank is the biggest loser in DAX, source: Bloomberg

Company news:

  • Allianz dropped by more than 1% in the early trading after media reports that the insurer is considering buying the Australian firm QBE
  • Volkswagen dethroned Toyota last year and was the best-selling automaker for the first time (mainly due to surging demand in China which remained unaffected by the diesel cheating scandal)

 

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